One-off depreciation for people counteracting the coronavirus

A building purchased to produce goods related to counteracting Covid-19 can be classified as a tax-deductible cost. No need to apply long-term depreciation is confirmed by the tax interpretation that has just been issued. The position of the tax office is exceptionally favorable, however experts advise caution.

COMMENT by Mateusz Pietranek, tax advisor from the GWW income tax team

Fight against Covid-19 vs. one-off depreciation
The one-off write-off can be made pursuant to Article 52s paragraph 1 of the PIT Act. It provides for the right to make depreciation write-offs on the initial value of fixed assets that were acquired for the production of goods related to counteracting Covid-19 and entered into the register of fixed assets and intangible assets in the period from 2020 to the end of the month, in which the state of the epidemic declared due to Covid-19 has been canceled.

– The application of one-off depreciation for the settlement of the purchase of a building is particularly financially beneficial for taxpayers, since the basic depreciation rate for non-residential buildings is 2.5%. per year, i.e. 40 years reduced by the full number of years from the date of their first use, but the depreciation period cannot be shorter than 10 years – explains Mateusz Pietranek, tax advisor from the GWW income tax team.

The value of a fixed asset does not matter
What is important is that the possibility of making direct settlement of costs allocated to the purchase of a building does not depend on its value. Taxpayers are not bound by any limit in this respect. With this solution, it is possible to significantly reduce the amount of income tax for the year in which the fixed asset was entered in the accounting books.

– It should be borne in mind, however, that the fixed assets subject to the settlement should only be acquired for the production of goods related to counteracting Covid-19. For example, if part of the acquired building is used for other purposes, the tax authority could challenge the one-off depreciation of this fixed asset – says Mateusz Pietranek.

Various goods can counteract Covid
It should also be borne in mind that the Act specifies a catalog of goods that are considered as used to counteract COVID-19, in particular: protective masks, respirators, disinfectants, medical protective clothing, shoe protectors, gloves, glasses, goggles, hand disinfecting and hand hygiene goods.

However, as Mateusz Pietranek notes, this is an open catalog, so taxpayers have the right to prove that other goods are also used for this purpose.

An article with a comment by our expert is available on Prawo.pl:
https://www.prawo.pl/podatki/jednorazowa-amortyzacja-srodkow-trwalych-na-walke-z-covid-i,507731.html